THE Philippines’ political and country risk level could worsen during the second half of the year with a deteriorating outlook, based on the research and analysis of professional services firm WR Advisory Group.
In its Philippine Political Risk & Country Report for the second quarter of 2026, WR Advisory Group President and CEO Robin Michael Garcia said the report showed an elevated risk level for the Philippines, with a deteriorating outlook.
The report measures overall risk through eight subcategories: political stability; institutional integrity; policy and regulatory risk; fiscal and sovereign risk; external and geopolitical risk; social and labor risk; economic growth risk; and security risk.
The report showed a high level of risk for the fiscal and sovereign category, also with a deteriorating outlook.
The report cited three key drivers for the high-risk level and deteriorating forecast for the fiscal and sovereign subcategories.
The first one is the country’s debt-to-GDP ratio crossing 65 percent at the end of the first quarter and climbing further to 66 percent by the end of the second quarter, its highest in around 22 years or since 2004.
The country’s debt servicing also reached P1.23 trillion through the first half of the year, or 61 percent of the full program, from a surge in amortization due to the pressure of the negative rating actions, said the report.
Garcia said economic conditions are also very sensitive to political movements.
He noted that economic growth could remain at 2 percent or lower for the second half of the year.
“If it’s just economic growth, it could still be at 2 percent or potentially lower. So that’s our official stand,” he said. This would mean that the country would miss its growth targets once again.
Garcia said businesses in the country would have to look at how the risks affect their industry.
With the increased operating cost environment, he said businesses should put more contingency in their planning, especially with many things possibly changing in the next few months until 2027.
“So, if you have to put the budget, let’s say, just hypothetically, a 15 percent budget for contingency, you have to maybe increase the budget for contingency to 20 percent,” he said.
While Garcia said businesses may continue to invest, he stated that they should be aware of the risks that come with investing during this time. He added that they should consider potential negative scenarios.
Political stability, institutional integrity, policy and regulatory risk, external and geopolitical risk, social and labor risk, and economic growth risk also posted an elevated risk level.
Among these, institutional integrity, external and geopolitical risk, and social and labor risk had a stable outlook, while political stability, policy and regulatory risk, and economic growth risk had a deteriorating outlook.
Meanwhile, security had a low risk level and a stable outlook.
Political stability risks were attributed to deteriorating presidential performance reducing the administration’s ability to absorb political shocks; the Duterte bloc remaining the largest faction while the Marcos faction weakens against the Duterte and opposition blocs, public rejection in Vice President Sara Duterte’s impeachment, among others.
Institutional integrity risks come from declining public confidence in the Senate following controversies and institutional assessments being tied to factions.
On the other hand, policy and regulatory risks were tied to the impeachment trial, which is seen as a distraction that could weaken legislative productivity, together with leadership disputes.
